Retirement Savings

 

Contributions
For 2011 and 2012, the maximum you can contribute to all of your traditional and Roth IRAs is the smaller of:
•    $5,000 ($6,000 if you're age 50 or older), or
•    Your taxable compensation for the year.

IRA contributions after age 70½
You can't make regular contributions to a traditional IRA if you're age 70½ or older. However, you can still contribute to a Roth IRA and make rollover contributions to a Roth or traditional IRA regardless of your age.

Spousal IRAs
If you file a joint return, you and your spouse can each make IRA contributions even if only one of you has taxable compensation. The amount of your combined contributions can't be more than the taxable compensation reported on your joint return. It doesn't matter which spouse earned the compensation.

Distributions
When can an individual withdraw IRA assets?
An individual can withdraw his or her IRA assets at any time. However, as with distributions from other plans, a 10% additional tax generally applies if he or she withdraws IRA assets before he or she is age 59½.

An individual generally can make a tax-free withdrawal of contributions if he or she does it before the due date for filing his or her tax return for the year in which the individual made the contribution. This means that, even if the individual is under age 59½, the 10% additional tax may not apply.

Rollovers
Click here to learn more on rollovers of retirement plan distributions from the IRS website. 

Roth IRAs

 

A Roth IRA is an IRA that, except as explained below, is subject to the rules that apply to a traditional IRA.

  • You cannot deduct contributions to a Roth IRA.
  • If you satisfy the requirements, qualified distributions are tax-free.
  • You can make contributions to your Roth IRA after you reach age 70 ½.
  • You can leave amounts in your Roth IRA as long as you live.
  • The account or annuity must be designated as a Roth IRA when it is set up.

 

Traditional IRAs

A traditional IRA is a way to save for retirement that gives you tax advantages.

  • Contributions you make to a traditional IRA may be fully or partially deductible, depending on your circumstances, and
  • Generally, amounts in your traditional IRA (including earnings and gains) are not taxed until distributed.

 

 

 

2011 Contribution and Deduction Limits - Amount of Roth IRA

Contributions That You Can Make For 2011

 

This table shows whether your contribution to a Roth IRA is affected by the amount of your modified AGI as computed for Roth IRA purpose.

If You Have Taxable Compensation and Your Filing Status Is...

And Your Modified AGI Is...

Then... 

Married filing jointly or qualifying widow(er)

Less than $169,000

You can contribute up to the limit.

At least $169,000 but less than $179,000

The amount you can contribute is reduced.

$179,000 or more

You cannot contribute to a Roth IRA.

Married filing separately and you lived with your spouse at any time during the year

Zero (-0-)

You can contribute up to the limit.

More than zero (-0-) but less than $10,000

The amount you can contribute is reduced.

$10,000 or more

You cannot contribute to a Roth IRA.

Single, head of household, or married filing separately and you did not live with your spouse at any time during the year

Less than $107,000

You can contribute up to the limit.

At least $107,000 but less than $122,000

The amount you can contribute is reduced.

$122,000 or more

You cannot contribute to a Roth IRA.

 

 

 

2012 IRA Contribution and Deduction Limits - Effect of Modified AGI on Roth IRA Contributions

 

This table shows whether your contribution to a Roth IRA is affected by the amount of your modified AGI as computed for Roth IRA purpose.

If You Have Taxable Compensation and Your Filing Status Is...

And Your Modified AGI Is...

Then...

Married filing jointly or qualifying widow(er)

Less than $173,000

You can contribute up to the limit.

At least $173,000 but less than $183,000

The amount you can contribute is reduced.

$183,000 or more

You cannot contribute to a Roth IRA.

Married filing separately and you lived with your spouse at any time during the year

Zero (-0-)

You can contribute up to the limit.

More than zero (-0-) but less than $10,000

The amount you can contribute is reduced.

$10,000 or more

You cannot contribute to a Roth IRA.

Single, head of household, or married filing separately and you did not live with your spouse at any time during the year

Less than $110,000

You can contribute up to the limit.

At least $110,000 but less than $125,000

The amount you can contribute is reduced.

$125,000 or more

You cannot contribute to a Roth IRA.

 

Page Last Reviewed or Updated: October 20, 2011. 

For more information on IRAs, please visit the IRS website

 

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